Universal healthcare and universal education are two indispensable tools for achieving inter-generational income mobility, but the United States has neither. Therefore, USA has almost no inter-generational income mobility. Q.E.D.

Thank you for suffixing your post with wider picture. It is a good practice to state out what argument you are in fact having. Nevertheless there is one important unanswered question in your post: Would you consider the income inequality still a problem if you were to live in a true "land of opportunity"? If your answer is no, why are you arguing against the "land of opportunity" line in the first place?

Arguing for "land of opportunity" and believing fitness is 100% inheritable, is arguing for caste society. Here's the argument:

Let's presume that is just society wealth is distributed based on fitness. (You can presume fitness to be anything.) If fitness is 100% inherited, then meritocracy is caste society. In this case social mobility is movement towards a just equilibrium. In this model, the greater social mobility is end result of initially more unjust society.

Its a bullshit argument. Cowen is saying low social mobility is good. Do Americans in generally accept this? If so perhaps they deserve better leadership.

America has developing country levels of inequality and low levels of social mobility because the middle classes cannot move upwards even if they are ambitious. Their European counterparts are able to shift upwards because they have access to health and education from an early age through to graduate level and have support that helps to overcome financial barriers. Moreover, social safety nets enable entrepreneurial europeans to take risks and set up innovative SMEs that their American cousins cannot.

If Cowen's argument was correct, it would follow that Americans are less ambitious than people in countries with even lower social mobility say some African or Latin American basket cases. And I doubt that is true.

You're assuming income inequality is mostly a matter of earned income, such that poor people's education and professional ambition means that they can't climb the ladder and get more income that way. But a very large part of income is passive; just ask Mitt Romney. Or, for that matter the guy who said this:

“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” (Warren Buffett)

Poor Americans have a greater chance to rise by way of frugal living and investing the difference than almost anywhere else, due to really cheap food and the ability to buy partial ownership of the means of production-- stocks, mainly-- for next to nothing in transaction costs. It's tougher once they have kids, but the ones who haven't yet still have a real shot; it would go a long way to turning this around if we made real financial education a priority. It's hard to be fired from the job of "owner."

I've never much prioritized income mobility/inequality as measures worth following.

As RR and others have pointed, it's tough using macro-statistics to paint an accurate picture. For example, say a janitor earns the same salary for 20 years that places him at the top of the bottom income quintile, and then the class of workers above him, say blue-collar auto-workers, all lose their jobs with a resulting plunge in their incomes. Guess what? That janitor might move into a higher income quintile, but I don't think anybody here would say that would be something to cheer about given what transpired in order to bring it about.

That's an extreme example to demonstrate one of many possible scenarios where increased income mobility could reflect something bad (income insecurity for an entire class of people).

My personal *favorite* measure is the absolute well-being of the bottom income quintile. I don't care if the top income quintile earns 5 times or 5,000 times more than the bottom income quintile, so long as the standard of living of the bottom income quintile of America increases primarily through private earned income gains as opposed to government subsidies.

Of course, by that measure, America is still struggling, given that incomes for the bottom 20% (by income) of workers are struggling and are heavily reliant on government aid like the earned income tax credit and food stamps.

My point is not to argue that America's economy has no problems - it's just to say that I prefer to use a metric that doesn't reward job insecurity as much as it does income improvement.

Comparing income mobility in Scandinavian countries with the entire U.S. is kind of ridiculous. The demographics, culture, mores, etc. are so different. It would be better match to these countries with specific U.S. states (with a high percentage of population of Nordic ancestry).

You want to compare tiny Scandinavian, or even Germanic, countries with a huge diverse country of 320 million? Naturally, the results would be skewed
to show higher income mobility in Europe.

U.S. was always larger and more diverse, but it is a much different society, economy, and job market, today.

We have gone from production capitalism to finance capitalism (outsourced many jobs and imported cheap labor). We have smaller increases in GDP growth and higher unemployment rates. Everybody cannot be a lawyer, banker, stock broker, or government bureaucrat. The U.S. imports/exports many of their high tech jobs. Job opportunities are much less than in the past.

The U.S. has dealt with huge cultural/sociological changes. The rise of the welfare state, massive influx of non-European immigrants, decline in the public schools, drug culture, breakdown of the family, political corruption, poorly run government bureaucracy, permanent under-classes, etc.

How can you compare income mobility without reference to economic, governmental, cultural, and sociological differences? Leftist researchers love to compare apples, oranges, and bananas, to support their agendas.

Timing within the family wealth cycle could also be a factor--at least in America. The logic I was taught says that rags to riches is seldom achieved in one lifetime. Typically it starts with a frugal, low-skilled generation that grinds out enough to send a kid or two to college. That first-to-college generation then typically follows the same path of frugal toil but for greater pay (to wit the children of Jewish clothing makers who founded many of the modern investment banks in the mid-20th century). The next generation is the one that enjoys the privileges and advantages of wealth--and probably there is about an equal chance that they keep getting richer, keep their relative status, or squander their inheritance.

While this cycle is constantly playing itself out family-by-family, one might postulate that there are more of those cycles starting during periods of high immigration. It would be interesting to study the growth of the country and of the various 'classes' on a lag from the immigration booms.

RR (I can't tell from the phone if this is coming as a reply) but I don't doubt Thatcher said that and it might have been true of Labor in 1979. But in 2012 United States, the near-consensus that GDP growth is the key economic goal goes clear from just left of your buddy Santorum to almost Bernie Sanders with most Democrats, including the President and most Republicans, including Newt Gingrich. What you have in common with Thatcher, Douthat, McArdle and our own W.W. is that you're fantasizing Fabians and then talking with the dream.

Your arguments are right, I just don't think you're arguing with anyone.

I'd include Obama, Bill Clinton, and many Democrats in the rational club. Not in the club are Bernie Sanders, Elizabeth Warren, our own M.S., and a sizable chunk of the American population (at least 20%). As Thatcher noted, they don't intend to make the poor poorer but that's the inevitable result of policies that prioritize income equality over general prosperity.

I'm actually not sure where M.S. falls on this spectrum. Maybe on the Sander side. But I guess my point would be, if you don't mean Barack Obama or Bill Clinton or many Democrats then who are you referring to as "progressives?"

Because the income range of European countries is more compressed than it is in the US, it's easier to move between income groups. IOW, it's easier to move from $30K to $40K than it is to move between $30K and $50K. Does that tell us anything useful?

What would happen if we compared the US to the EU? Or individual US states to individual European countries?

Finally, while I think Cowen's particular explanation is wrong, I would not dismiss the cultural argument entirely. As I often quote from Milton Friedman, when told that there's no poverty in Scandinavia, he responded that there's no poverty in America either, among Scandinavian-Americans. Most of the health, education, and income outcome disparities with other countries disappear when you account for culture.

You made a good point. I like the Freedman quote because it is so true.

We have had a huge influx of non-European immigrants. There are some groups, who value hard work, but don't value the education needed to get the positions for income mobility.

Among those of us from working class families, who had grandparents from Europe, I know very few who did not move up the U.S. economic ladder. Among those from rural Scandinavian or German backgrounds, there are very few poor, except those with mental illness, or alcohol/drug addiction, in my generation.

@ M.S.: "Among the unexamined assumptions here is the notion that 'smarts' are innate, while 'ambition' is environmentally determined."

Tyler Cowen doesn’t make this simplistic mistake of assuming either smarts or ambition are not a mix of genetics and environment. He is hypothesizing how different contextual (environmental) factors in Europe might have an impact on ambition and thus income mobility.

@ M.S. "schools...schools...schools."

Tyler Cowen doesn’t claim variable school quality isn’t a factor; he is hypothesizing about another factor that could also be at work. Repeating the importance of school quality doesn’t speak to his hypothesis.

I read Cowen's piece with amusement: is he really saying that Americans are simply different from Europeans? I read it several times and decided he meant this more as a bomb than as an idea he would defend. I hope so because "he's different" is the argument used to define racism and every other kind of hatred. It's a version of "you know, they aren't like us". It's even used for the same kind of effect: there is no reason to work for more opportunity - not equal outcomes but more opportunity - because well, you know, they're different.

Cowen is saying Europeans behave differently because of their culture, i.e. environment.

That is not racist.

Well, to some liberal-progressives, who think concerns over the breadth of people relying on food stamps are racist, and who think voter-ID laws are racist, and see racism behind every tree, yeah, I guess they might think Cowen is racist.

Cowen is making the generally accepted argument that many European societies have different trade-offs of quality-of-life vs work than the US. The opportunities available to be contentedly "medium chill" (as it's called in the US) really are greater in Europe and people respond to these options. I take it from MS's body of work that he would favor the US being more of a place where people can be less ambitious about work, enjoy public goods (like well-funded education and healthcare), travel more, etc. I generally favor this, too.

I don't know if Tyler Cowen is right that this explains European income mobility (though he has more to say about the comparison itself later in his post). I do know that MS did a poor job of characterizing Cowen's argument as Cowen actually made it (as opposed to other arguments/ideas to which MS seems to be responding).

People say "black" people don't succeed because of their "culture". People say Jews can't be trusted because of their culture - and there are scads of websites filled with lies and bits taken out of context to "prove" the Talmud justifies lying and stealing. Islamists say the West is a corrupting influence because our culture is evil.

The lack of reading comprehension among commenters is expected. First, did I say Cowan is racist? No. I said my opinion, after reading his actual piece more than once, is that he meant to be provocative.

As for Max Weber, he was German. Which if I'm not mistaken is European. He must therefore be lazy because his father was rich and connected and that culture would mean he wouldn't bother to do anything. That's applying the same idiotic non-arguments.

I'm not sure I follow the arguements of the last paragraph. Why did the article change tones from evaluating income mobility in advanced economies to issues pertaining to moral problems?

I disagree with Cowen's hypothesis but I do not see this as a moral issue. M.S. hypothesizes that decreased income mobility may be due to the public education system in America. Why must this be a moral issue. I agree that public school in America are in massive need of reform. The worst schools in America are in poor and often urban areas. I do not think this need be a moral issue.

One could theoretically attribute many of the ills to poor public school system. Including inter-generational income mobility, under-skilled labor force (including the hieghten levels of unemployment), as well as the high levels of incarceration among yound urban dewellers.

I'm not sure I follow the arguements of the last paragraph. Why did the article change tones from evaluating income mobility in advanced economies to issues pertaining to moral problems?

I disagree with Cowen's hypothesis but I do not see this as a moral issue. M.S. hypothesizes that decreased income mobility may be due to the public education system in America. Why must this be a moral issue. I agree that public school in America are in massive need of reform. The worst schools in America are in poor and often urban areas. I do not think this need be a moral issue.

One could theoretically attribute many of the ills to poor public school system. Including inter-generational income mobility, under-skilled labor force (including the hieghten levels of unemployment), as well as the high levels of incarceration among yound urban dewellers.

What your final paragraph describes is an argument which moves, on one side, from "It's immoral that incomes are unequal" to "Income inequality is due to immoral differences in educational opportunity" -- that is, it becomes more specific about what the problem is. On the other side, it moves from "Incomes are unequal due to moral failings (lack of ambition) of the poor" to Mr Cowen's "Income inequality is due to inate differences in intelligence/ambition, so there is no moral question involved" -- in short, the poor are poor because they are stupid, since if they were smart they would be ambitious and thus not remain poor. We can make our own moral judgements on the virtues of those two sets of arguments.

However there is a flaw in your final sentence. It isn't (if Mr Cowen is correct) that the problem is poor people are not succeeding, try as they might. It is that effort alone will not overcome an inate handicap of lack of sufficient intelligence. The latter may not be the way the universe ought to have been designed, but it is not a moral failing on the part of those who live in it -- although you could argue that it represents a moral failing on the part of the designer of the universe....

Conservatives don't think inequality is a moral problem because there's nothing immoral about inequality. This is the fundamental difference between liberal and conservative economic ideology. Conservatives want everyone to be richer. Liberals want everyone to be more equal. As Margaret Thatcher said, Labour doesn't mind that the poorer are poorer so long as the richer are less rich.

You also use income equality and income mobility interchangeable which it clearly is not.

McArdle points to a statistical reality. Not everyone can move into the top quintile. In fact, only exactly 20% can occupy the top quintile. Mobility tells us nothing about inequality or absolute wealth.

Douthat links to a comparison of mobility between the US and Denmark. Most Americans enjoy income mobility comparable to Denmark except the bottom quintile. For all the talk of the 1% and the loss of middle class jobs, there's a lot of movement between the two groups. The big disparity in mobility is between the richest 80% and the poorest 20%. Maybe someone should start an "Occupy Main Street" movement with the slogan "We are the 20%." But of course that won't happen because there are no NYU drama students in the bottom 20%.

RR, your post is 100% true according to conservative fantasy. There are a lot of dynamism progressives and more than a few conservatives who have used inequality as a means to an end.

As an ideological agnostic (or at least a partisan one) I think there's nothing wrong with Tyler Cowen speculating along these lines, but it is worth applying some analytical hoofawra to the question of whether we are forsaking a lot of productivity which I'd take as the better question relative to income mobility. I'm pretty convinced that class assignment is sclerotic and that an equality agenda is also sclerotic. The question is whether Europe is being more socialist or we're becoming more feudal. Whether or not income mobility is worth doing something about at the policy level depends on the answer to that question.

I am sorry, but that is a straw man on the level: Conservatives don't think inequality is a problem, they WANT the poor to starve to death. Or do you claim that the poor in countries in the Netherlands and Sweden actually are poorer than the poor in the States?

McArdle doesn't recognize the fact that there's more than one way to "move" between quintiles. Firstly, quintiles can be moved around quite a bit over time, so, say, a 60k-a-year technologist might have been in the top 20% in the 80es, but since his salary was stagnant over time, he moved down into the 20% to 40% bracket. Secondly, there's a lot of movement simply because through our lives we change our quintiles quite a bit: my good guess is that the mushy middle between 40% and 80% can be the salary progression over my career. Does it matter if my daughter was born when I had a lot smaller salary than I do now because I was in an entry-level position? How to define "household income at birth" in this case? I mean, most people have babies relatively early in their careers, but some have them a lot later. How to compare?

This brings us to the point in the article which tries to compare mobility between US and Denmark: it's next to impossible by looking at the numbers alone. In US, the regional disparities are much bigger. The middle bracket can easily correspond to 80%+ bracket in some low-cost state like, say, Kentucky, or it can correspond to really below-average pay in something similar to New York. Not only this, but a 40k salary can correspond to a retiree, an army personnel well into the career, a supervisor at fast food place without much education or an entry level lawyer or accountant. All these are very different households. Denmark is a lot more homogenious.

A good index of upward mobility might be the percentiles of income achieved by unskilled adult immigrants and skilled immigrants - define the latter as those with college degrees for convenience. The bigger the spread, the more the mobility.
Another measure of opportunity might be the gap between the incomes of the 90th and 10th percentiles (or 25th and 75th) of adult unskilled immigrants - I would expect a big gap in the USA, and a smaller one in Europe - but who knows.
I stress adult immigrants in both measures so as to eliminate the confounding effects of school quality.